Back to top

Image: Bigstock

Is Fidelity Equity-Income Fund (FEQIX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

If you have been looking for Mutual Fund Equity Report funds, a place to start could be Fidelity Equity-Income Fund (FEQIX - Free Report) . FEQIX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

Fidelity is based in Boston, MA, and is the manager of FEQIX. Since Fidelity Equity-Income Fund made its debut in May of 1966, FEQIX has garnered more than $7.08 billion in assets. The fund is currently managed by Ramona Persaud who has been in charge of the fund since October of 2011.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. FEQIX has a 5-year annualized total return of 10.59% and it sits in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 14.47%, which places it in the top third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. The standard deviation of FEQIX over the past three years is 16.72% compared to the category average of 16.96%. Looking at the past 5 years, the fund's standard deviation is 14.98% compared to the category average of 14.9%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.9, the fund is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. The fund has produced a negative alpha over the past 5 years of -2.71, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Investigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is primarily on equities that are traded in the United States.

The mutual fund currently has 89.07% of its holdings in stocks, which have an average market capitalization of $250.96 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Industrial Cyclical
  3. Technology
This fund's turnover is about 50%, so the fund managers are making fewer trades than the average comparable fund.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, FEQIX is a no load fund. It has an expense ratio of 0.57% compared to the category average of 0.99%. From a cost perspective, FEQIX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Bottom Line

Overall, Fidelity Equity-Income Fund ( FEQIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Fidelity Equity-Income Fund ( FEQIX ) looks like a good potential choice for investors right now.

Your research on the Mutual Fund Equity Report segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Fidelity EquityIncome (FEQIX) - free report >>

Published in